|
(1/21/12)
Investors are becoming very complacent based on the Put to Call
Ratio and Volatility Index (VIX). The 5 Day Average of the Put to Call
Ratio has now dropped below the 0.82 level. In the past tops have occurred
when the 5 Day Average has fallen from above the 1.15 level to below the 0.82
level (points A to B). 
Meanwhile
the VIX closed near 18 on Friday. In the past when the VIX has
fallen from above the 30 level back to around the 16 level tops have occurred as well
(points C to D). Based on the VIX there still could be a little more
to the upside before a decent pullback occurs. 
Finally an argument
can certainly be made that the S&P 500 is developing a large Triangle
pattern as the longer term downward and upward trend lines are converging.
The recent rally from the early October low would be "D" which would
peak soon and then be followed by a pullback for "E" to
complete the Triangle. 
Amateur Investors
|
